Investing in Art: A Beginners Guide

There is no shortage of information out there on investing with art. Between tracking the rise and fall of commodities to predict the fine art market to projecting how sanctions on Russia will affect the price of Renaissance Art, it’s hard to know where to begin. Well, take a deep breath, and don’t even think about what I just said. Instead, read this list of straightforward and practical tips to get you started with art collecting.

This is one of the best and most practical pieces of information I can offer. Good art will always be easier to sell than okay art: any medium, by any artist. Let’s not also forget that this piece may be hanging on your wall for awhile before being sold, and you don’t want to be displaying something that’s just okay.

2. Buy art that is representative of the artist

You may be able to find a bargain on an obscure piece by a popular artist, but if that work isn’t representative of their name or their popular style of work, it’s going to be harder to sell. Not to say that it won’t, but again, you’re looking for the highest rate of return and what will stand out in your house in the meantime.

3. Be aware of the costs

As with all types of investing, you’ll have costs to consider when art investing. Did you know that the IRS considers fine art a collectible, and so its gains are taxed at a higher rate (28%) than most other investments? Auction fees, paying your art adviser, framing, transportation and storage are a few more possible costs you may incur. Read The Costs of Art Investing for more information on the costs you’re likely to run into.

Don’t let this information discourage you, however, instead use it to your advantage. Always take the fees into account before buying. If you don’t expect a return from a piece that will even cover the costs, it was never worth investing in. However, when you find that special piece, the return will make the fees look like chump change.

4. Research

The more information you have, the better. Start by looking at auction results. Sotheby’s, Phillips and Christie’s are three of the biggest auction houses out there, and you can see auction results right on their websites. Check results often and look for trends in medium, style and artist.

Also keep an eye on social trends and see how they affect art prices. Did any type of art suddenly increase in value after Trump was elected? What about since the rise of feminism? Keeping up with social media can help you notice societal trends, and auction results can help you compare the affect that those trends have on art prices.

An example:

You may have noticed an increased interest in space and space exploration recently in the public. It is perhaps most noticeable on popular social media site Reddit (the 4th most popular website in the US), but you can also see the trend in news coverage, feature films, more space-related scientists becoming popular (Elon Musk, Neil deGrasse Tyson), and even the influx of NASA shirts in stores and on the street. It’s no coincidence that Sotheby’s just held its first space exploration themed auction since the 1990s. In the auction house’s own words, “In the intervening decades, the enthusiasm for space exploration has greatly increased, and the collecting field has grown dramatically.”

5. Make Friends in High Places

The art collecting world is a pretty exclusive club and its getting harder to enter, but that shouldn’t discourage you from trying altogether. As some old guy once said, “The journey of a thousand miles begins with a single step.”

So start local. The more you know about the inner workings of the art world the better, even if its just the art world of your hometown. There is information you will learn this way that you could never get from research alone. So make friends, get phone numbers and work your way up. Even if you don’t make it the top, you’ll still learn invaluable information about the market you’re investing in.